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A settlement agreement can be a valuable document for employers in a difficult workplace situation to obtain a waiver of potential claims and a “clean break”. A settlement agreement has many upsides both for employers and for employees where there is mutual agreement over references and announcements, for example. This allows employers to have more control over an exit and to be able to manage a tense situation in a smoother way. The importance of confidentiality obligations cannot be understated to avoid negative publicity and staff morale being hit.
Vardags is highly experienced in drawing up settlement agreements. The agreement may be needed to settle a potential claim by an employee or to allow for the withdrawal of a grievance or claim already made. Either way, we can provide expert advice help our clients to resolve workplace problems.
We will ensure that all formal requirements are met to protect your company’s interests.
When an employee informs you that they wish to leave your company or make a grievance or bring a claim it may be better to negotiate a managed exit. Alternatively, a company may decide that the best way forward is to have a without prejudice conversation about an exit as things are just not working out, for whatever reason.
There will often be a number of discussions leading to the agreement of an exit package for an employee. Our highly experienced team are able to assist you in making these conversations as productive as possible whilst protecting your business interests. We can help you with scripts and e-mails to ensure your paper trail is well ordered and protects your company’s position.
It is important for employers to know about and be alert to the implications that words and e-mails can have in any future employment tribunal or court cases if they are not truly off the record and “without prejudice”. Our team can help you understand how to get it right.
One of the more complicated aspects of settlement agreements often centre around which payments are taxable and which payments can be made tax free. The £30,000 tax free concession applies to payments made by way of compensation. Contractual payments such as payment in lieu of notice should not be paid tax free and the treatment of notice should be clear from the settlement document to avoid issues further down the line.
It is also important that the settlement agreement is effective to waive the specific employment claims which the employee may have. There are certain requirements which need to be met for settlement agreements to work, including allowing the employee to obtain independent legal advice on their position. We can guide you through the settlement agreement discussion from start to finish to ensure that a smooth exit is achieved to eliminate legal risk as far as possible.
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